K.T Thomas, J.:— A complaint was filed by the Income-tax Officer, Special Circle, Ernakulam, against M/s. Metalex Agencies and its partners and also some of its officers. The said agency is a firm having eleven partners. The complaint was taken on the file of the Judicial Magistrate of the 1st Class, Ernakulam, and was later transferred to the court of the Addl. Chief Judicial Magistrate (Economic Offences), Ernakulam. There are seventeen accused of which the firm is the first accused. Offences alleged against the accused are those under sections 277 and 278 of the Income-tax Act, 1961 (for short “the Act”), besides offences under sections 120B, 193, 196, 420 and 109 of the Indian Penal Code, 1860. Almost a decade after the institution of the complaint, one of the accused (the 13th accused) filed a petition in the trial court praying for discharge of the accused on various grounds. The learned Magistrate dismissed the petition by order dated March 12, 1985, against which Crl. R.P No. 201 of 1985 has been filed. Not being satisfied with the said revision petition, the 13th accused filed Crl. M.C No. 717 of 1985 under section 482 of the Code of Criminal Procedure, 1898, for quashing the complaint and all subsequent proceedings thereunder.

2. The allegations in the complaint are briefly these: On June 26, 1971, returns were filed by the partners of the firm showing the income for the assessment year 1971-72. The total income shown in the returns is a little above Rs. 4½ lakhs. The Income-tax Officer rejected the returns holding that the partners concealed substantial portion of their income and submitted false returns. He made his best judgment assessment by adding an amount which is a little over Rs. 20 lakhs to the returned income. But the Appellate Assistant Commissioner, on appeal filed by the assessee, slashed down the amount and modified the assessment by adding Rs. 3 lakhs to the income returned. When the above order of the Appellate Assistant Commissioner was challenged in second appeal by both the Revenue and the assessees, the Appellate Tribunal enhanced the addition to income from Rs. 3 lakhs to Rs. 41 lakhs. The Inspecting Assistant Commissioner, under section 271(1) of the Act, imposed a penalty of Rs. 5 lakhs on the firm, but that was subsequently quashed by the Appellate Tribunal on the ground that the Inspecting Assistant Commissioner has no jurisdiction to impose penalty. However, regarding the question of jurisdiction of the Inspecting Assistant Commissioner, a reference has been made at the instance of the Revenue under section 256(1) of the Act.

3. The complaint was filed by the Income-tax Officer, Special Circle, as early as September 29, 1975. Even penalty proceedings under section 271(1)(c) of the Act were not completed by the Inspecting Assistant Commissioner on the date when the complaint was filed. Encouraged by the Tribunal's order quashing the penalty imposed, the 13th accused contended that the complaint will not stand for the reasons stated in this petition. The learned Magistrate was not persuaded to uphold even one of the grounds urged and hence he dismissed the petition and proceeded with the complaint. On the filing of this revision petition, this court stayed the proceedings in the lower court. Before I discuss the points urged during the time of arguments, some more facts are to be stated. Section 279 of the Act provides that no person shall be proceeded against for certain offences (including offence under section 277) under the Act except at the instance of the Commissioner So the complainant has stated in paragraph 13 of the complaint that the Commissioner of Income-tax, Kerala II, has authorised the complainant to file the complaint. A copy of the authorisation issued by the Commissioner has been produced along with the complaint. When the order of the Appellate Assistant Commissioner was challenged, both by the Revenue as well as by the assessee, the Judicial Member of the Income-tax Appellate Tribunal has observed that the partners of the firm are innocent of the concealment and that the concealment was actually done by the officers who carried on the business. Accused 2 to 12 in the complaint are shown as partners of the firm. Accused 13 to 17 are the officers of the firm who actually did the business according to the other petitioners.

4. Sri K. Kunhirama Menon, learned counsel for the petitioner, raised mainly the following points during his arguments: (1) The complaint was filed on the basis of a finding of the Income-tax Officer that a huge amount (nearly Rs. 21 lakhs) has been concealed. The Appellate Tribunal slashed down the said quantum in a substantial way and brought it to a figure which is a little over Rs. 4 lakhs. The authorisation for prosecution was given on the strength of the earlier finding that a huge amount has been concealed as noted by the Income-tax Officer. Hence, the contention is that the Commissioner could not have chosen to direct the Income-tax Officer to launch prosecution against the accused if the concealment is only for the present figure which is relatively a small figure as now found by the Tribunal. Therefore, the point advanced is that the authorisation given by the Commissioner does not hold good in view of the changed circumstances. (2) As the Appellate Tribunal found that the partners of the firm are not guilty of concealment of income, prosecution as against accused, A-2 to A-12, who are partners cannot continue. (3) If the partners are not liable to be prosecuted, the prosecution as against the remaining persons also cannot be continued because the original sanction given by the Commissioner was to prosecute all the accused together. (4) The first accused firm, being a juristic personality, is not liable to be proceeded against since a juristic person cannot be sent to jail.

5. I shall now proceed to consider the above points. Though all the above points have not been raised before the lower court, I am persuaded to consider those points in view of the petition filed under section 482 of the Code.

6. Section 279 of the Act says that a person shall not be proceeded against for an offence under sections 277 and 278 “except at the instance of the Commissioner”. It only means that the prosecution shall be instituted under the authority of the Commissioner. In other words, the Income-tax Officer cannot file a complaint on his own initiative. He can file the complaint if he is authorised by the Commissioner in that behalf. It is sufficient if the Commissioner directs him to file a complaint. (T.S Baliah v. T.S Rangachari, ITO, [1969] 72 ITR 787 (SC)). Here, the Commissioner had initiated proceedings and authorised the Income-tax Officer to file the complaint. The mere fact that the Commissioner in his proceedings considered, inter alia, the assessment made by the Income-tax Officer which assessment was later interfered with by the appellate authorities does not mean that the authority granted by the Commissioner ceased to be effective with the modification of the assessment order in appeal. Otherwise, the Commissioner will have to wait for the final verdict of an assessment for initiating prosecution proceedings. That will amount to considerable delay in institution of proceedings in criminal court. The first appeal and the second appeal under the Act are time-consuming procedures and hence no prosecution could promptly be instituted. Learned counsel cited the decision in Balaji Oil Traders v. ITO, [1984] 150 ITR 128. A single judge of the Karnataka High Court expressed the view that a complaint cannot be allowed to be pending in a criminal court during the pendency of appeal or revision before the Appellate Tribunal. Continuance of the criminal case during such pendency would amount to abuse of the process of court, according to the learned judge. He also observed that if the appellate or revisional authority modifies the order of the subordinate authority, the complainant cannot pursue his complaint on the strength of the facts already placed. This appears to be an extreme proposition. But there are other decisions which take a different approach. A single judge of this court in Balakrishnan v. ITO, [1976] KLT 561, pointed out that the prosecution initiated by the Income-tax Officer has independent existence irrespective of what happens to the assessment proceedings Again, in A.D Jayaveerapandia Nadar & Co. v. ITO, [1975] 101 ITR 390, a single judge of the Madras High Court expressed the same view. The Supreme Court, in the decision in P. Jayappan v. S.K Perumal, First Income Tax Officer, Tuticorin , [1984] 149 ITR 696, held that “it is not law that no proceedings can be initiated at all under section 276C and section 277 as long as some proceeding under the Act in which there is a chance of success of the assessee is pending. A mere expectation of success in some proceeding in appeal or reference under the Act cannot come in the way of the institution of criminal proceedings under section 276C and section 277 of the Act” (at p. 700). The Supreme Court in the said case further pointed out that the criminal court has to judge the case independently on the evidence placed before it. In the light of these decisions, especially the decision rendered by the Supreme Court, I do not think that the principles have been correctly stated in Balaji Oil Traders' case, [1984] 150 ITR 128 (Kar).

7. The next contention is that since the Appellate Tribunal found that the partners are innocent of the false returns, the prosecution as against them cannot continue. In support of the contention, reference was made to Uttam Chand v. ITO, [1982] 133 ITR 909 (SC). That decision was rendered by the Supreme Court in a case where an Income-tax Officer found that a certain firm was not genuine and that the documents contained the forged signature of one of the alleged partners. Prosecution proceedings were initiated against the partners of the firm. In the meanwhile, the Appellate Tribunal found that the firm was genuinely constituted. On the aforesaid finding of the Appellate Tribunal, prosecution was sought to be stalled. The Supreme Court, in reversal of the decision of the High Court, held that in view of the finding recorded by the Appellate Tribunal, the assessee could not be prosecuted for filing false returns. The decision in Parkash Chand v. ITO, [1982] 134 ITR 8 (P&H) was also cited in support of the said contention. According to learned counsel, the Appellate Tribunal's order is final as provided in section 254(4) of the Act and hence the finding made by the Appellate Tribunal regarding concealment of income will be binding on the criminal court. This contention requires scrutiny.

8. Chapter XIV of the Act consists of provisions regarding the procedure for assessment. Section 139 enjoins on every person a duty to furnish returns regarding his income, if the total income exceeds the, taxable limit. Such returns shall be verified in the prescribed manner. Section 144 empowers the Income-tax Officer to make the assessment of the total income of the assessee “to the best of his judgment”, in certain cases. Chapter XX consists of provisions relating to appeals and revisions. Section 246 gives a right to any assessee who is aggrieved by an order of assessment passed by the Income-tax Officer to file an appeal before the Appellate Assistant Commissioner. Section 253 provides that any assessee, aggrieved by an order passed by the Appellate Assistant Commissioner, can file an appeal to the Appellate Tribunal. Section 254 empowers the Appellate Tribunal to pass such order as it thinks fit on the appeal. Sub-section (4) says that the orders passed by the Appellate Tribunal, on appeal, shall be final. This is subject to the powers of the High Court on a reference under section 256 of the Act. A reading of the above provisions shows that finality is attached to the order of the Appellate Tribunal regarding the assessment. But that finality is not attached to every observation made by the members of the Appellate Tribunal, unless the observation is so inextricably connected with the conclusion regarding the assessment. If some of the remarks of the members of the appellate authority are not relevant for the determination of the assessment, those remarks cannot get the seal of finality envisaged in section 254. In the instant case, the Judicial Member of the Appellate Tribunal made the following observations in the order of the Appellate Tribunal: “So, under these circumstances, I am quite satisfied that none of the partners knew of this activity. It was all done without the knowledge or consent or connivance or abetment or instigation of any of the partners. They were innocent of these transactions. There is absolutely no material placed before the Tribunal to implicate any one of these partners with the knowledge of these activities the Accountant Member of the Appellate Tribunal does not appear to have shared the aforesaid view of the Judicial Member. However, both of them did not accept the returns filed by the assessees and hence the Appellate Tribunal also made a best judgment assessment, though they did not go to the extent of adding such a huge amount as Rs. 20 lakhs. Even if the observations quoted above were absent in the order of the Appellate Tribunal, the absence of same would not have mattered. In other words, those observations have practically no bearing on the assessment proceedings. In fact, the member who made those observations has stated in a later stage of the order that those observations are not relevant. In his own words “but this finding that the partners did not know anything about this has no impact on the assessment. It is an irrelevant fact”. Thus, the Member who made those observations was sure about the inapplicability of those findings in the assessment proceedings. Therefore, the petitioner cannot now rely on those observations to get the partners absolved from criminal liability at the entrance stage itself.

9. In view of my finding regarding the second contention, it is not necessary to consider the third point canvassed by learned counsel.

10. The last contention is that M/s. Metalex Agencies, being a firm, cannot be prosecuted since the firm cannot be sent to prison. Section 278B of the Act provides that when an offence under this Act is committed by a company, the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished, besides the liability of the person who was in charge of, and was responsible to, the company. The said section was incorporated in the Act by the Taxation Laws (Amendment) Act, 1975, which came into force on October 1, 1975. At the time when the returns were filed on June 26, 1971, section, 278B was not in the statute. Corresponding amendments were made by the same Amendment Act in the penal provisions, sections 277 and 278. Prior to the said amendment, those offences were punishable with imprisonment only. A sentence of fine was impermissible before October 1, 1975. Hence, the contention is that even if a juristic person is found guilty, no punishment could have been awarded to such a juristic person on account of the practical inability to impose a sentence of imprisonment.

11. Learned counsel for the Revenue referred me to a decision of a single judge of the Madras High Court in A.D Jayaveerapandia Nadar and Co. v. ITO, [1975] 101 ITR 390. In an exhaustively discussed judgment, the learned judge concluded that a company is amenable to penal consequences if it is found guilty of the offence. But the absence of a provision for awarding a sentence of fine was not considered in the said decision. A Division Bench of the Allahabad High Court in Modi Industries Ltd. v. B.C Goel, [1983] 144 ITR 496, had occasion to consider an identical question. Satish Chandra C.J, who spoke for the Bench, observed that the law is well-settled that a corporation or a juristic personality cannot be subjected to bodily punishment or imprisonment (Headnote). “A company registered under the Companies Act, 1956, is a juristic person and cannot be awarded the punishment of imprisonment and hence cannot be prosecuted for breach of sections 277 and 278 of the Act (during the relevant period)”. Similar view has been expressed by a Division Bench of the Calcutta High Court in Kusum Products Ltd. v. S.K Sinha, ITO, [1980] 126 ITR 804. A single judge of the Delhi High Court also has taken the same view in D.C Goel v. B.L Verma, [1974] 93 ITR 63. I am in respectful agreement with the aforesaid view. I, therefore, hold that the first accused firm is not liable to be prosecuted for the offences under sections 277 and 278 of the Act in respect of the returns filed on June 26, 1971. Learned counsel for the Revenue raised a different argument that even if those two offences are not chargeable on the first accused, the offences under the Penal, Code mentioned in the complaint can be put against the firm. Learned counsel referred to section 11 of the Indian Penal Code in which the word “person” is defined as including a company or association or body of persons, whether incorporated or not. Section 193 of the Code deals with punishment for intentionally giving false evidence. Section 196 deals with corruptly using any evidence as genuine which he knows to be false or fabricated. Section 420 is the offence of cheating. The definition of the offence involves fraudulent or dishonest inducement to be made by the offender. Section 120B is the offence of criminal conspiracy. It is not necessery to particularly point out that a juristic person cannot be made to answer any of those offences. All those offences could conceivably be committed by natural persons alone. Therefore, I am not persuaded to retain the first accused in the array of the accused for facing the Penal Code offences mentioned in the complaint.

12. In the result, I quash the complaint as against the first accused, M/s. Metalex Agencies. But the case will proceed against the remaining accused. As the case is already an old one, I direct the learned Chief Judicial Magistrate (Economic Offences), Ernakulam, to take expeditious steps and dispose of the case as early as possible.